By Sarah Fredrickson
College students are suffering from a universal phenomenon, one that spans across borders and generations. There’s no way to escape it. There’s no way to cure it. What is it? FOMO spending.
According to a study conducted by Experian, only 56% of millennials and Gen Z feel optimistic about their current financial situation. This trend is also felt among many college students and seems to continue further into adult life. Is there a solution?
According to a study in the World Journal of Clinical Cases, FOMO, aka “the fear of missing out,” is a fairly recent term used to describe the phenomenon of compulsive behavior to keep one’s social position due to fears of being left out. FOMO was coined in 2004 as social media exploded among millennials.
FOMO spending, as defined by Credit Karma, happens when someone purchases something because they feel pressured to do so, such as a dinner out or a spring break trip, even when they don’t truly have the funds for the purchase.
Many self-help blogs and articles list the top five ways to curve FOMO spending like sticking to a budget or cutting out spending, but University of Georgia Finance Professor Michael Thomas said it’s not that easy.
“The most important part of this process is to realize that money and our engagement with financial resources is not an external process,” Thomas said. “It’s internal.”
FOMO spending is just one of the many compulsive behaviors people act upon when feeling left out. A 2019 Credit Karma study found that nearly 50% of millennials overspend to keep up with friends.
Thomas said this feeling affects all generations of people and can start at a young age. One example he gave was watching infomercials on TV as a kid.
“What happens is that they’ll say ‘well, you’ll be the talk of the town, you’ll be the X, Y and Z or this or that or the other,’” Thomas said. “So that ploy has kind of always been around the notion of fear of missing out because it’s rooted in this notion or this idea of connection.”
FOMO spending may start at a young age, but Thomas said it can have the biggest impact on college students.
“We called it ‘keeping up with the Joneses,’” Thomas said. “We’re talking about the same thing. We’re just using a different language for a new generation. Accept that it’s the same thing. People who were keeping up with the Joneses were not frivolously and randomly doing this. Usually, it’s a bid for connection. It’s a bid for respect. It’s a bid for ‘Hey, I’m on the same level’ or acceptance. So for college students, what is college life? Nothing but a bid for acceptance.”
Thomas teaches anywhere from 750 to 950 students a semester in his Introduction to Personal Finance course at UGA. He addresses FOMO spending by trying to change the narrative of talking about personal finance.
“Let’s get the shame out of the space,” Thomas said.
There may not be a quick, easy fix to FOMO spending, but there are many resources to help address this issue. Megan Ford is the head of the ASPIRE Clinic at the UGA. The clinic offers a number of services such as therapy, financial planning, nutrition education and legal problem-solving at little to no cost to students, faculty and others in the local Athens-Clarke County.
Ford said she sees a number of students who struggle with FOMO spending and says the first step to fighting FOMO spending urges is to do some introspection.
“I would invite people to do a little bit of self-reflection on what could be going on,” Ford said. “Why am I buying this or feeling, if I bought this translates into me feeling more important or more valuable as a person or more accepted in my group or just in society.”
Although many of her students experience this feeling, Ford believes that this may affect students with less financial stability more than others.
“I don’t think anyone escapes it really on any particular level across the socio-economic spectrum,” Ford said. “It could be that if you are in a state of some deprivation of being able to access things that you want or not being able to spend on certain experiences that other people you’re surrounded with are spending on, that you would experience that with a bit more frequency.”
Moss Joslin is a third-year science illustration major at UGA who pays for school through the Pell Grant and scholarships. Joslin sometimes has other large unexpected expenses like dental costs and a phone replacement they need to worry about. However, Joslin said small things like missing out on going out to dinner don’t really bother them.
“I don’t feel shame about it,” Joslin said. “I’ll still go out and just get a drink. My brain’s just like ‘You don’t have the money for that, you can’t do it.’”
However, there are more costly experiences that Joslin might have to miss out on.
“I feel like I’m missing out on some of the college experiences that people with parental support get,” Joslin said. “I really want to go abroad, but that’s going to be really hard. I’m going to have to find a scholarship.”
Joslin said despite their success with a limited budget, they still struggle with the FOMO spending phenomenon just like many other students.
“I really want to go, but I don’t know if I can,” Joslin said.
Sarah Fredrickson is a journalism student at the University of Georgia.